Tuesday, Platinum Group Metals Ltd. (PLG: News ,PTM.TO: News ), an exploration stage company, said it agreed to a term sheet with Anglo Platinum Limited and Wesizwe Platinum Limited to consolidate and rationalize the Western Bushveld Joint Venture or WBJV.

Under the terms, Vancouver, Canada-based Platinum Group will control 74% of the WBJV Projects 1 and 3 and Wesizwe will control 100% of Project 2 and 26% of Projects 1 and 3.

Anglo Platinum will convert its direct WBJV holdings to shares in Wesizwe in an empowerment transaction. The company will pay no new cash or shares until up to six months after closing. Projects 1 and 3 will be operated by Platinum Group, while Wesizwe will operate their core project.

Anglo Platinum will vend its 37% interest in the WBJV to Wesizwe for common shares representing a 26.5% interest. Concurrently, Platinum Group will acquire a 37% interest in Projects 1 and 3 from Wesizwe in consideration of Platinum Group's interest in Project 2 and R408 million in cash.

Wesizwe will purchase Anglo Platinum's 37% interest in the WBJV for 211,850,125 Wesizwe common shares. In a concurrent transaction, Platinum Group will purchase the 37% interest in Projects 1 and 3 from Wesizwe for 785.5M Rand or about $100.7 million, offset by the sale to Wesizwe of Platinum Group's 18.5 % of Project 2 for 376.9 million Rand or nearly $48.2 million.

The balance, due by Platinum Group, of 408.6 million Rand or about $52.4 million is to be paid by Platinum Group into an escrow account within 6 months of the formal closing of this transaction. If the payment for the balance due is not made by Platinum Group then Wesizwe shall be entitled to claw back up to 19% in the projects.

The proposed acquisition by Platinum Group represents $32.75 per 4E oz of Proven and Probable Reserves and $29.94 per 4E oz of Measured and Indicated resources.

The proposed transaction will enable Platinum Group to double its attributable planned production from Project 1 from about 92,500 ounces platinum, palladium, rhodium and gold or 4Es per year to 185,000 ounces per annum and also double its share of reserves by 1.63 million ounces 4Es to 3.26 million ounces.

It will also increase attributable Measured and Indicated Resources by 1.75 million ounces 4E to 5.4 million ounces as well as increase Inferred Resources by 0.44 million ounces 4E to 2.34 million ounces 4E.

The term sheet is subject to regulatory and other approvals as well as the completion of definitive agreements.

Platinum Group was advised by RBC Capital Markets, while Wesizwe was advised by Qinisele Resources. Anglo Platinum was advised by Rand Merchant Bank.

The settlement of the "equalization payments" currently due to Anglo Platinum under the terms of the WBJV shall be settled by Wesizwe in common shares and by Platinum Group in cash by December 31, 2008.

At present, equalization payments due are about $18 million payable by Wesizwe and $20 million payable by Platinum Group. If Platinum Group does not pay Anglo Platinum by December 31, Anglo Platinum can elect to provide a 6-month extension with interest. A total make up of about $2.0 million is also payable by Platinum Group to Wesizwe for past exploration costs incurred on Project 2.

PLG is currently trading at $2.48, down $0.09 or 3.50%, on 42,400 shares. – RTTNews